But there's an area in which incomeniks have it all over the totalniks, and that's in ease of implementation in retirement. By using an income-oriented approach, you can create the equivalent of a steady paycheck in retirement (or attempt to, anyway). But tapping your principal periodically, as you're required to do with a total-return approach, isn't just psychologically difficult. It's also a logistical headache. You have to figure out which accounts to tap for cash, which in turn affects where you're holding liquid assets, and you also have to figure out how to tap your accounts in the most tax-efficient manner possible. Given that, it's no wonder that so many retirees are attracted to investments that kick off current income.

Of course, annuities have long held appeal to those seeking to generate a paycheck in retirement. But with interest rates as low as they are now, annuity payouts are also depressed. Financial-services firms have been busy cooking up new investment products to help retirees generate a paycheck in retirement; many of them combine investments with insurance features. It's early days for most of these vehicles, however, and at this point, it's tough to give a ringing endorsement to any one option within this relatively untested group. Moreover, many investors are satisfied with their current investment portfolios; they're just not sure where to turn for cash when they need it.

That's where the bucket approach to retirement planning can be so effective. Retirement theoreticians often consider bucket strategies as too simplistic, but the concept resonates with many real-life retirees and the financial advisors who work with them. The basic idea is that you create a dedicated pool of assets, composed of cash and other very liquid holdings, to meet your near-term income needs. Once you've done that, you can hold those assets that you don't need to fulfill near-term living expenses in progressively more aggressive investment vehicles.

Such a strategy helps ensure that you're taking money from your most stable pool of assets first, and therefore you won't have to withdraw from your higher-risk/higher-return accounts (for example, those that hold stocks or more-risky bonds) when your account is at a low ebb. That strategy also gives your stock assets, which have the potential for the highest long-term returns, more time to grow.

Here's how to use a total return "bucket" approach to meet your own in-retirement cash needs.

1. Determine the Paycheck You Need From Your PortfolioIf you're attempting to create the equivalent of a paycheck from your portfolio, the first step is to gauge your income needs during retirement, either on an annual or a monthly basis. Start by tallying your total expenditures, then subtract steady sources of income that you can rely on, including Social Security and pension income. What's left over is the amount that you'll need your portfolio to deliver each month or each year.

2. Make Sure Your Withdrawal Rate Is SustainableThe next step is to evaluate whether your desired portfolio withdrawal amount is too large or just about right. Most financial planners consider a 4% starting withdrawal rate--combined with annual upward adjustments to accommodate inflation--a safe withdrawal amount. But if your portfolio mix is more conservative than the 60% equity/40% bond portfolio used in the 4% rule's research assumptions--or if your retirement time horizon is longer than 25 or 30 years--you'll want to consider a withdrawal rate that's even lower.

3. Put in Place a Short-Term Bucket Holding of at Least One to Two Years' Worth of Living ExpensesAssuming your desired withdrawal rate is sustainable, set up a short-term bucket consisting of at least one to two years' worth of living expenses set aside in highly liquid (that is, checking, savings, money market, and certificate of deposit) investments.

Where you hold these assets depends on where you are in retirement as well as where you're holding the bulk of your retirement savings. Being strategic about where you take withdrawals from can help you stretch out the tax-savings benefits from your tax-sheltered accounts. This article provides more detail on sequencing withdrawals to maximize your long-term tax savings, but here's a quick overview:

If you're older than 70 1/2 and taking required minimum distributions from your IRA or the retirement plan of your former employer, some or all of your near-term paycheck should come from those accounts. (Bear in mind that the amount of your RMD will vary from year to year, based on your account balances as well as your age.)

If you're not 70 1/2 or your RMDs won't cover your cash needs, turn to your taxable accounts to see if they will cover your cash needs during the next two years.

If your RMDs and taxable accounts won't cover at least two years' worth of living expenses, carve out any additional amount of living expenses from your IRA or company retirement plan assets using the sequence outlined above. Save Roth accounts for last because they offer the most flexibility and long-term tax-savings benefits.

4. Put It on AutopilotOnce you've identified where your cash will be coming from during the next few years, contact your financial-service provider to see if it can help automate your withdrawals, sending you the equivalent of a paycheck at preset intervals. (Better yet, your firm should be able to deposit the paycheck directly into your account.) The larger your fund company or brokerage firm, the more likely it is to offer such an option.

5. Tackle Other Important TasksIn addition to getting your paycheck plan up and running, it's important to periodically replenish your cash assets as they become depleted. Once you've set aside your cash position, put in place a plan to periodically refill your cash stake so that it always will cover at least two years' worth of living expenses. Plan to incorporate this step into your rebalancing process. Ideally, you'd fill up your most liquid bucket with proceeds from rebalancing-related sales or with money from your next most liquid pool of assets (for example, intermediate-term bonds).